The Bankwatch

Tracking the consumer evolution of financial services

The Turner Review: a regulatory response to the global banking crisis

Here is the Turner Review commissioned by the Chancellor of the Exchequer.  Martin Wolf reviews here at the Financial Times.  Wolf argues it is a watershed for finance making this excellent point –

“The most important analytical points are that individual rationality does not ensure collective rationality, that individual behaviour is frequently less than rational and that, in consequence, markets can overshoot, in both directions. Above all, such failings create systemic risks: if everybody believes in the same (faulty) risk models, the system will become far more dangerous than any individual player appreciates; and if everybody relies on their ability to get out of the door before anybody else, many will die in the inferno.

Here is the introduction in the report. 

Over the last 18 months, and with increasing intensity over the last six, the world’s financial system has gone through its greatest crisis for a least a century, indeed arguably the greatest crisis in the history of finance capitalism. Specific national banking crises in the past have been more severe – for instance, the collapse of the US banking system between 1929 and 1933. But what is unique about this crisis is that severe financial problems have emerged simultaneously in many different countries, and that its economic impact is being felt throughout the world as a result of the increased interconnectedness of the global economy.

More analysis later.  Here is the full report site, and link to pdf.

The Turner Review: a regulatory response to the global banking crisis

Following the banking crisis, the Chancellor of the Exchequer asked Lord Turner, in his capacity as our Chairman, to review and make recommendations for reforming UK and international approaches to the way banks are regulated.

Here, we publish Lord Turner’s Review and the supporting FSA Discussion Paper. These take an in-depth look at the causes of the financial crisis and recommend steps that the international community needs to take to enhance regulatory standards, supervisory approaches and international cooperation and coordination.

Main document

The Turner Review : [ PDF ]

A regulatory response to the global banking crisis

Written by Colin Henderson

March 20, 2009 at 00:18

Posted in regulation

%d bloggers like this: